At least 100,000 tons of white sugar bought by Indonesia are stranded in neighboring Thailand because of a lack of ships, forcing Jakarta to extend the deadline for arrivals.
Thailand barely has sugar for sale because the harvesting season has just ended, while India and Pakistan already have their bins filled with sweetener, at least for now, industry sources said.
“Importers have trouble finding ships. That’s why the government has decided to extend the deadline for shipments to the middle of April,” Indonesian Trade Minister Mari Pangestu told reporters.
Indonesia, Southeast Asia’s largest buyer, has told importers to bring sugar into the country before the end of March to prevent domestic prices from falling when new supplies become available with the crushing season that starts in May and lasts through July.
Indonesia, which buys sugar from Thailand, set this year’s white sugar import quotas at 500,000 tons, up from 405,000 tons in 2004. Importers bought 300,000 tons of sugar after Jakarta issued the first batch of the quotas in December.
The second batch, released in February, allows importers to purchase the remaining 200,000 tons. Only half has arrived in Indonesia so far despite the approaching deadline.
Pangestu said the delay was unlikely to affect domestic supply, which looks ample ahead of the crushing season. She also ruled out more white sugar purchases from Thailand.
“We don’t have any plan to issue more sugar permits,” said Pangestu.
As the domestic supply is getting thinner in Thailand, traders are keeping an eye on the next harvest after a severe drought prevented farmers from planting for almost four months.
Cloud-seeding operations started recently and has brought some relief but many are still skeptical.
“Several cane growing areas have received good rain over the past week. However, it remains to be seen whether it will be enough,” said Boonthin Kotesiri of the state-run Thai Cane and Sugar Board.
Thailand is Asia’s biggest sugar exporter, selling the sweetener to buyers such as Japan, South Korea, Taiwan and Malaysia.
Drought has cut short the crushing season in China and forced sugar factories to stop production. But millers said they were waiting for raw sugar prices to fall in the international market before making purchases.
China is not the only reluctant buyer. India, the world’s largest consumer, is not so keen on the sweetener because of ample supply.
“We are on top of the situation,” said one leading sugar importer in India’s financial capital of Bombay.
“Supplies are more comfortable than what was being perceived by the international trade over the last six months,” he said.
In neighboring Pakistan, the government has rejected calls from sugar mills to reinstate import duties on raw and white sugar.
“We have reviewed local market trends and reached a conclusion that imports of duty-free sugar is the only way to check the upward trend in prices,” an official with Pakistan’s Production and Industries Ministry said.
The private Pakistan Sugar Mills Association has asked the government to stop allowing duty free import, saying that such a measure will hurt the sugar industry.
Pakistan scrapped a 25% import duty on sugar in January to cover an expected shortfall in production and check a surge in domestic prices. (Reuters)